Modules»Inventory Control»Min/Max or EOQ
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Last modified on 11/19/2015 2:21 PM by User.

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Min/Max or EOQ

The system is capable of supporting two different methods of ‘suggested’ quantities for reordering.

One is Minimum/Maximum set on the Warehouse Master (Task 19 in the Inventory module).  By entering the ‘season’ beginning and ending months, along with the minimum and maximum quantities during the ‘on’ and ‘off’ season, the system will prompt the Purchasing department when the item should be purchased.

21. Season start: (2) The # of the month when the busy season starts for this item.  If non-seasonal, enter 1

22. Season ends : (2) The # of the month when the busy season ends for this item. If non-seasonal, enter 12.

23. On sea max : (10) The maximum quantity wanted on-hand during the busy season. This is used in P/O to calculate order quantity.

24. On sea min : (10) The minimum quantity wanted on-hand during the busy season. This triggers reorders in P/O.

25. Off sea max : (10) The maximum quantity wanted on-hand during the slow season. This is used in P/O to calculate order quantity.

26. Off sea min : (10) The minimum quantity wanted on-hand during the slow season. This triggers reorders in P/O.

Another method for automatic purchasing is to use EOQ – Economic Order Quantity

  • Begin by setting the following parameters, found in 5/32/22/1
    • EOQ'CCI=.260   This is the “cost of carrying inventory”.  It is comprised of a ‘Constant’ i.e. .20 =20% plus the ‘prime rate’ i.e..060 (6.0%)
    • EOQ'REP'COST=5    This is the replenishment cost (i.e. the ‘cost’ for researching and entering a PO line item).  It is typically between $4 and $6.

·        Next run the program which calculates the EOQ quantity (found on field 20 of the Warehouse Master record).  The program, found in 5/32/15, is: Calculate Warehouse EOQ Values.  (note: you will need 36 months of item history for this program to run properly) The program can be run in several modes…..either press the ENTER key or by pressing the F12 key, the user can run the ‘normal’ mode and the system will update the EOQ quantities  (both ways work exactly the same way), or by using the F12 and using the ‘Debug’ mode (which allows the user to print a report to screen or on paper, but NO updating of the EOQ is done).  Note: before this program is run, be sure to run the Build Item-Monthly History File program (found in 5/32/13) as it updates the current history so the system has the latest figures to use in calculating the EOQ.  

After choosing one or both methods (you can make use of both methods by using product codes, item number ranges, etc.) allow the system to suggest a re-order quantity and optionally generate and create a Purchase Order in the Purchase Order for Restocking programs (found in Task 8 in the Purchase Order module) and follow the sub-tasks listed below:

Sub-task 1. Select Stock Items for Reorder Edit List – See document: Task 08 – Purchase order for restocking – Sub-Task 1 BLDRSO

 

  • This is a series of 5 sub-tasks used for reordering stock.  They are designed to be used in numerical order starting with one, next two, next three, next four, to five.  This will use the Warehouse records to determine a need to order list.  It will allow you to choose to let the computer automatically set the quantities or you may manually scroll the list setting the quantities.  The modifying is done in Sub-task 2.  You may print an edit list at any time using Sub-task 3. If you have the system automatically set the quantities, you could go directly to Sub-task 4 from this sub-task.  
  • This program subtracts the quantity committed and backordered to customers from the quantity on hand, to determine the quantity available.
  • It displays the minimum quantity level from the Warehouse Master.
  • It also uses the quantity available and calculates a suggested reorder level to bring inventory up to the maximum on-hand quantity specified for this item and season or the calculated EOQ quantity
    • Example:  Boxes of Christmas scene stationery is the item.
      • The season start month is 10, for October.
      • The season end month is 12, for December.
      • The on season maximum is 20, and minimum is 5.
      • The off season maximum is 5, and minimum is 1.
  • During the month of November the manager prints the “Select Stock Items for Reorder Edit List”.  At the time the report is printed, the quantity on hand is 4, committed is 4 and back ordered is 2. The availability is -2.

  • The stock reorder edit list will have a suggested reorder quantity of 22, (2 to fill the backorder, and 20 to bring the on-hand up to the maximum desired quantity of 20).

Sub-task 2  Modify Reorder Qty's & Vendor's from Edit List – See document Task 08 – Purchase order for restocking – Sub-Task 2 RSOENT  

  • This Sub-task allows you to scroll each item & set the vendor #’s and reorder quantities.
  • The vendors/suppliers selected this sub-task 2 RSOENT; are used in sub-task 3 RSOLST & 4 RSORPT edit lists.
  • If you continue on to Sub-task 5 Generate & release reorder PO’s GENPOR, the vendor’s and quantities selected will be used to automatically open P/O’s.

 

Sub-task 3 Print Edit List by Vendor with same detail as select report – See documentTask 08 – Purchase order for restocking – Sub-Task 3 RSOLST

 

Sub-task 4 Print edit list by vendor with reorder quantities & value – See documentTask 08 – Purchase order for restocking – Sub-Task 4 RSORPT

 

Sub-task 5 Generate & Release Reorder PO's – See documentTask 08 – Purchase order for restocking – Sub-Task 5 GENPOR

  • This task will generate and, if desired, issue a Purchase Order.  If the PO is only generated, the user may go to Task 1 (Purchase Order Entry & Editing) and make further adjustments and then issue the PO.